Chinese Economic Reform

Chinese Economic Reform

Chinese Economic Reformation 4 Periods of Reformation Reforms in specific sectors Four Special Economic Zones Shanghai Free Trade Zone Total Import & Export GDP Question & answer part Content

4 Periods of Reformation –1984 (First Period): Economic reforms began after Deng Xiaoping Deng's first reforms began in agriculture He divided the land of the People's communes into private plots. Farmers were able to keep the land's output after paying a share to the state. The country was opened to foreign investment for the first time Deng created a series of special economic zones for foreign investment in 1984, the PRC further opened 14 coastal cities to overseas investment: Dalian, Qingdao, Qinhuangdao, Tianjin, etc. These regions became engines of growth for the national economy.

–1993 (Second Period) A notable development was the decentralization of state control Deng Xiaoping reopened the Shanghai Stock Exchange closed by Mao 40 years earlier. Privatizations began to accelerate after 1992, and the private sector surpassed the state sector in share of GDP for the first time in the mid-1990s 4 Periods of Reformation

–2005 (Third Period) Despite Deng's death in 1997, reforms continued under his handpicked successors, Jiang Zemin and Zhu Rongji, who were ardent reformers. In 1997 and 1998, large-scale privatization occurred Between 2001 and 2004, the number of state-owned enterprises decreased by 48 percent During the same period, Jiang and Zhu also reduced tariffs, trade barriers and regulations and reformed the banking system In 2001, reduced inflation, and joined the World Trade Organization The domestic private sector first exceeded 50% of GDP in 2005 in 2005, China was able to surpass Japan as the largest economy in Asia.

4.2005–Present (Fourth Period) Hu-Wen Administration began to reverse some of Deng Xiaoping's reforms in 2005 the government adopted more egalitarian and populist policies In 2013 Chinese government established Shanghai free trade zone 4 Periods of Reformation

Reforms in specific sectors Agriculture: During the pre-reform period, Chinese agricultural performance was extremely poor and food shortages were common After reforming agricultural output increased by 8.2 percent a year, compared with 2.7% in the pre-reform period Industry China is now the world's biggest producer of concrete, steel, ships and textiles, and has the world's largest automobile market. From 1975 to 1992, China's automobile production rose from 139,800 to 1.1 million, rising to 9.35 million in 2008 Chinese textile exports increased from 4.6% of world exports in 1980 to 24.1% in 2005

Trade and FDI The government reduced tariffs and other trade barriers, with the overall tariff rate falling from 56% to 15%. When China joined the WTO, Trade has increased from under 10% of GDP to 64% of GDP. By 2005, China’s average statutory tariff on industrial products was 8.9 percent. Reforms in specific sectors Services After China joined the World Trade Organization (WTO), the service sector was considerably liberalized and foreign investment was allowed. Restrictions on retail, wholesale and distribution were ended Banking, financial services, insurance and telecommunications were also opened up to foreign investment.

 In 1980, Chinese government established 4 special economic zones.  Who are they? 1.Shenzhen (Guangdong Province), 2.Zhuhai (Guangdong Province), 3.Shantou (Guangdong Province), and 4.Xiamen (Fujian Province ) Four Special Economic Zones  Benefits To increase the external trade and gain foreign exchange; To attract foreign investment, including the benefits through renting lands; To increase the employment opportunities To accumulate experiences of international trade As the pioneer of economic development, encourage the formation of a new social economic structure.

Shanghai Free Trade Zone  Shanghai Waigaoqiao FTZ is the earliest and the largest FTZ in China.  Shanghai Free Trade Zone is the new economic reformation of China  It has formed port industries by the fundamental truss of manufacturing and processing, free trading, transport trading, store allocating, ship servicing and others.  All the import materials and machines are tax-free.  No limits on dealing-type commodities.  Enterprises engaged in manufacturing business in the FTZ enjoy 15% income tax rate.  The percentage of domestic and overseas sales and custom tax rate are the same.  Every commodities entering into the FTZ can be stored long with free charge.  Foreign exchange obtained by FTZ enterprises may 100% deposit in foreign exchange without abiding by compulsory exchange system.

Total Import & Export

GDP & Per Capita GDP

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